Armed Forces (Redundancy, Resettlement and Gratuity Earnings Schemes) Order 2010

2010 No. 345

This Order consolidates the existing rules for redundancy and other benefits under the Armed Forces Pension Scheme 1975 (“the AFPS 1975”) and makes some amendments with regard to the level of some payments. The Schemes set out in Parts 3, 4 and 5 only apply to a person who joined the armed forces before 6th April 2005. Articles 3 to 16 in Part 2, set out the Armed Forces Redundancy Scheme 2010, (“AFRS 2010”). This applies to members of the armed forces who were eligible to join the AFPS 1975 and who do not belong to the Armed Forces Pension Scheme 2005 (“the AFPS 2005”). Under the AFRS 2010, different entitlements arise depending on whether service ceases before 1st April 2013.

Articles 4 to 8 set out definitions and interpretations for Part 2. Articles 9 to 15 contain provisions that apply to members of the armed forces who cease to be in service as a result of redundancy.

Article 9 provides that a member of the armed forces is eligible for a payment under article 10 if various conditions are met, including that the Defence Council has notified them that they will be treated for the purposes of this Scheme as having become redundant, and service ceases after 6 April 2010.

Article 10 provides for entitlement to an immediate lump sum payment to arise on leaving service.

Articles 11 to 13 set out how the payment under article 10 is to be calculated.

Articles 11 and 12 provide for cases where the leaver was on a long service commitment, depending on the period of redundancy reckonable service they have accrued whilst in service. To comply with HM Treasury’s requirements, the amount payable to these leavers changes if they leave on or after 1st April 2013.

Article 13 provides for leavers on short service commitments.

Article 14 imposes a limit on the amount that can be paid where the leaver is entitled to a maximum pension under the AFPS 1975.

Article 15 deals with the case where a person who is entitled to a payment under article 10 rejoins the armed forces or enters certain types of reserve forces service after a short break. It provides for part of the sum paid under article 10 to be repaid.

Article 16 deals with the case where a person who is entitled to a payment under article 10 rejoins the armed forces and becomes entitled to a further payment under article 10 when the new service ceases, by reason of redundancy. It provides that the old service does not count in calculating the further payment.

Articles 17 to 26 in Part 3 set out the Armed Forces Gratuity Earnings Scheme 2010, (“the AFGES 2010”).

Article 17 provides that a payment may be made to members of the armed forces serving under gratuity earning terms with no entitlement to pension where they have been in post for over a year, subject to satisfactory service. Article 17(7) states that if having completed service under gratuity earning terms, a person is offered a permanent post within the armed forces, instead of taking a lump sum payment they may opt to join the AFPS 2005, thereby transferring this previously non pensionable service into a pension scheme. Article 17(8) provides that this option to commute can only be exercised before the commitment period ends. However, Article 17(9) provides that where a person rejoins the armed forces into a pensionable post within 5 years, the gratuity can be converted into the new pension scheme, if it is repaid within 12 months of rejoining.

Article 18 sets out the basis for calculating a gratuity by reference to the number of years of relevant service (pro rata) multiplied by the gratuity rate as set out in the pension codes.

Article 19 sets out the basis on which abatements can be made from a gratuity payment.

Article 20(1) provides that if a person’s service ends before the commitment period, the Defence Council has a discretion to allow the gratuity to be paid in respect of the whole period of service. Articles 20(2) and (3) states that where service is terminated before the commitment period for reasons of unsatisfactory service or misconduct, the gratuity may be reduced or withheld at the discretion of the Defence Council.

Article 21 sets out the basis for calculating a gratuity in the event of maternity and related leave.

Articles 22, 23 and 25 set out the basis for calculating a gratuity in the event of a death in service and specify to whom lump sum and short term pension payments can be made.

Article 24 provides for a short term pension to be payable in addition to a gratuity under article 22 in the event of a death in service, if the specified conditions are fulfilled. A short term pension is only payable where a person leaves a surviving spouse or civil partner at the time of death and cannot be paid to a surviving eligible partner.

Article 26 specifies that any person who wishes to make a contribution to their existing NHS or teachers’ pension, will be responsible for both employer and employee contributions.

Articles 27 to 32 in Part 4 set out the Armed Forces Resettlement Commutation Scheme 2010 (“the AFRCS 2010”).

Articles 28 and 29 set out to whom the AFRCS 2010 applies and the conditions for qualifying under it.

Article 30 deals with the factors which affect the amount of pension which can be commuted. Article 30(2) provides that any supplements paid shall be included when calculating resettlement commutation and pension. Article 30(3) provides that a maximum of half can be commuted and Article 30(5) lists the awards which are not commutable.

Article 31 sets out the rules on abatement and repayment of the lump sum.

Article 32 provides the basis for calculating resettlement commutation where a person’s service ends by reason of misconduct.

Articles 33 to 36 in Part 5 set out the Armed Forces Resettlement Grants Scheme 2010, (“the AFRGS 2010”).

Article 35 sets out the conditions to be fulfilled in order to qualify for a resettlement grant.

Article 36 sets out the circumstances in which the whole or a fraction of the resettlement grant may be repayable on returning to the armed forces.

Articles 37 to 38 in Part 6 set out the Transitionals, which state that references to particular terms in the AFRCS 2010 and the AFRGS 2010 shall include references to the previous rules which were in place prior to this Order taking effect.

Made: 17th February 2010 Laid before Parliament: 22nd February 2010 Coming into force: 6th April 2010

Published: 22/02/2010 21:24

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